The USDA’s Rural Utilities Service (RUS) released the rules for this year’s Rural eConnectivity Program (more commonly called ReConnect grants). This is the first of a two-part blog. Today’s blog will cover the basic grant rules. If you’re at all interested in ReConnect, wait for tomorrow’s blog because these grants have a lot of restrictions that should eliminate a lot of potential applicants.
Speeds. This is the first grant that will consider as grant eligible any area not served today by 100/20 Mbps broadband. The grants can be used to overbuild DSL and fixed wireless. But note that there is a big grant scoring penalty for serving areas with existing speeds greater than 25/3 Mbps. This means the grant allows serving areas with existing speeds greater than 25/3 but penalizes an applicant for doing so – that’s a nuance press coverage of the grant rules seems to have missed. The grants also do not automatically adhere to FCC mapping data, but an applicant needs to be prepared to demonstrate why an area is eligible. To challenge the FCC mapping requires an opinion from an engineer who has examined technology in the field or a rigorous online survey that demonstrates slow speeds.
Eligible Entities. Almost anybody is eligible to apply, but a big preference is given to tribes and to “local governments, non-profits, and cooperatives as applicants and additional points to those applications (including for projects involving public-private partnerships where the local government, non-profit, or cooperative is the applicant)”.
Must be Rural. Grant serving areas must be rural and remote. There is a ReConnect mapping tool that will tell you if an area is eligible. To be eligible for funding, the grant area must be “15 minutes or more from an urban area of 2,500-9,999 people; 30 minutes or more from an urban area of 10,000-24,999 people; 45 minutes or more from an urban area of 25,000-49,999 people; or 60 minutes or more from an urban area of 50,000 or more people”. Additionally, there is a density test.
Pandemic Matters. Applicants must be prepared to demonstrate how the grant area was hit particularly hard by the pandemic.
Economic Need. The grants favor bringing broadband to Socially Vulnerable Communities, which means not only low-income but also economically disadvantaged in some way. On first reading, this looks like it’s going to take some effort to meet this test.
Prefers Open Access. Retail rates must be affordable and non-discriminatory. There are grant points awarded to those willing to offer ‘wholesale rates”, which is another way of describing open access. Most network owners are not going to be willing to invite a competitor to compete with them in a rural area.
Strong Labor Standards. While the grant doesn’t require Davis-Bacon prevailing wages, there are grant points awarded for agreeing to pay the prevailing wages or higher.
Net Neutrality. Applicants must be willing to adhere to net neutrality. I don’t know any smaller ISPs that don’t automatically do this, but this could discourage larger ISPs from applying.
Can be Used in RDOF Areas. This is one of the more confusing rules and will need clarification. It seems likely that this will allow somebody already getting RDOF to use these funds if it accelerates the construction timeline. I doubt that the funding will be awarded to overbuild an RDOF award area.
Can Overbuild an RUS Borrower. This is new and has never been allowed by the RUS before. It’s hard to think that the RUS will really give funding to overbuild an existing borrower that still owes money to the RUS.
It’s important to digest these rules thoroughly. For example, if your proposed grant area is not sufficiently rural or the residents are not poor, then you’re likely wasting time making an application. Tomorrow’s blog lists a bunch of gotchas in the grant rules and in the grant process.